Thu Apr 03, 2014 at 15:38:27 PM EDT

Our country is now more than $17 trillion in debt. When debt occurs, bad things happen. You can lose your car, your home, your credit cards. There are tangible consequences to debt; every family in Michigan knows that.

In Ray Franz's world, everyone pays cash money for their homes and cards, and credit cards are actually debit cards. By the way, I sit on the board of directors for a local business. We're looking to borrow money so we can move the store. That is, if you properly manage debt, good things can also happen.

Congress, unfortunately, continues to ratchet up its unchecked spending without a thought about the consequences.

This is Ray Franz, not understanding the difference between deficit spening and the national debt. I'm sure this misunderstanding won't lead him to a conclusion that is ill-informed, counterproductive and rooted in ignorance about how national governments function.

Our country’s debt has accumulated during several administrations and Congresses led by both parties. There seems to be no will or desire in Washington, D.C. to stop this out-of-control spending, so future generations of Americans are going to be stuck paying the bill.

Huh. In case, you're not a "follow the link" sort of person, what it says is that the deficit -- which is spending more than you take in as revenue -- has been cut in half. So, when Ray Franz says it seems to him that no one in Washington has shown any will to "stop this out-of-control spending," what he really means is that he's not actually following the issue of debt, deficits and government policy regarding both very quickly. Just the sort of guy you want offering solutions for all of it.

So, what can the people do? Plenty.

All of it silly, ill-informed and counterproductive is my guess.

Our nation’s founders had the foresight to include Article V in the U.S. Constitution, which allows state legislatures to call a Convention of States to propose amendments to the Constitution. Two-thirds of the states must approve a resolution before a Convention of States can be called.

They also had the foresight to not include in the Constitution language prohibiting deficit spending, probably because they had a better understanding of how national governments finance things than does Ray Franz. That means people dead 200 years are better suited to lead this nation than someone currently sitting in one of its legislative bodies.

That is what Michigan has done with the Legislature’s approval of Senate Joint Resolution V, which made our state the 23rd that has petitioned Congress for a convention to propose a balanced federal budget amendment.

Remember that bit about "the people" doing something silly, ill-informed and counterproductive?

Requiring Congress to balance its budget will stop America’s fiscal bleeding and allow our economy to catch up. This effort has the support of 76 percent of Americans, according to CNN/Gallup polling. But it’s got zero support from those who want to continue the status quo in Washington and allow Congress to potentially bankrupt the country. Some special interests are spreading fear of cuts to state funding or reductions in federal programs.

Now what kind of person would say that if you force the government to balance its budget during a period of deficit spending that it will translate into cuts in government programs?

It is true that Congress will have to make tough choices, just as Michigan and other states have had to in order to balance their budgets and return to financial reality and stability. An important fact to remember, though, is that rising interest rates are going to take money away from the states and programs. In fact, the U.S. General Accountability Office estimates that in the future, interest payments on our debt will account for half of the federal budget.

You may be interested to know that the General Accounting Office didn't say this. Here's a link to their 2013 Spring outlook, a document that Ray Franz has apparently elected to not read before declaring what the GAO says. In fact, under their most debt-addled projection, payments on interest never get above 10 percent of GDP. Where did the 50 percent figure come from? I spent an hour on the GAO's website trying to figure it out, also time on the Congressional Budget Office. The only reference I could find was in a report about a report from the Committee for a Responsible Federal Budget.

By the way, if you spend much time reading these reports, you swiftly conclude that the primary driver of debt and interest payments isn't "out-of-control" government spending. It's that America's population is getting older and those additional costs are coming from the Social Security Trust Fund and the Medicare Trust Fund. So, Ray Franz could do more to unburden future generations of debt payments by foregoing both his Social Security and his government health care.

The time to act is now. The federal debt is approaching 110 percent of Gross Domestic Product. To put that into perspective, Greece’s economy was crashing last year at 125 percent; China has only 22 percent; and the state of Michigan has bonded debt of 8 percent GDP. And for Michigan, most of the debt is capital improvements-related, not general operating funds, like our federal government.

Other nations with debt-to-GDP higher than 100 percent? Iceland and Japan. Guess whose debt-to-GDP is the lowest? North Korea, at less than one percent. The takeaway? Ray Franz has no idea what any of this means.

Some fear that a balanced budget amendment convention will move into topics beyond its scope, or become a “runaway” convention. This scenario is next to impossible and the naysayers know it. Each resolution approved by the states clearly says the convention would be called to consider a balanced budget amendment only. Anyone who would dare mention other amendments would likely be sent home by their individual state governments.

Yes, in a constitutional convention called by people who don't understand fundamentals about national government budgeting, suggesting that an off-topic amendment be included would probably be treated like saying the name Voldemort in Hogwarts. We can be certain of that.

More importantly, I think the imaginary risk of a runaway convention is far less damaging than the very real risk of continued runaway spending by our federal government.

Since there is no actual "runaway spending" by our federal government, since our national debt is driven primarily by an aging population that is living longer during a period of life where more health care is consumed, the odds of both are zero.

The bottom line is that our country can no longer afford to loot our future merely to bribe our present. If the federal government can’t or won’t control itself, it is incumbent on the states to provide those checks and balances for our citizens. The founding fathers intended on it, common sense demands it and our children and grandchildren deserve it, so it’s time to step forward.

Except that it's not the federal government's inability that is piling up debt. It's entitlement programs that are going to be pressed because the Boomers are getting older. It's also budget items that wouldn't be governed by a balanced budget amendment. So as to his last sentence: Nope, nope, and nope.

We'd be remiss if it wasn't pointed out that there are good times for the federal government to deficit spend: Wars and during a recession. One of the reasons why interest payments are expected to go up, is because interest rates are currently very low because we haven't fully recovered from the last recession. Once we do that, interest rates will rise. So, not only would Ray Franz's balanced budget amendment actually fail to address the causes of national debt, it would tie our hands in addressing economic crises. Or, better put: It's a silly, ill-informed and counterproductive idea.

the federal debt to household debt is an economic illiterate, and instantly loses all credibility. Ditto those who think Greece, a second tier economy with no control over monetary policy, is in any way similar to the U.S.

The fact that our debt is denominated in dollars is important.
(4.00 / 1)

If Greece were allowed to repay its debts by simply issuing more drachma, they wouldn't have much of a problem. But they'd have awfully stupid creditors.

The U.S. debt literally is repayable in dollars issued at will by the U.S. government. Now, it might be a bad idea to issue so much liquidity, but it certainly provides options not available to Greece - or to you and me.

the federal debt to household debt is an economic illiterate, and instantly loses all credibility. Ditto those who think Greece, a second tier economy with no control over monetary policy, is in any way similar to the U.S.

can be printed (and is in fact required) as long as GDP is rising. Greece has no way to devalue their currency, or increase it's supply, or change their own interest rates, or do most of the things a sovereign nation can do to their economy to make it easier to deal with their debt. Of course, the main study everyone relied on that equates high debt levels with economic disaster was recently found to have errors that render it's conclusions meaningless...